PD RTFR MU LAS.

FDRMULAC TRENDING MONEY MANAGERS

The Formulaic Trending Monthly Abstract

December 15, 2012: RAM Score
=

+23.60

Mapper Score TM

4 of 6 increasing

RAM Score is a proprietary trending tool that takes into account several dynamic components related to the U.S. markets and economy. It features a core baseline which allows for correlation between these multiple components so that they may be added together for an overall Ram Score. As a trending tool, we believe that a positive RAM Score indicates that the odds are stacked in favor of equity investments and a negative RAM Score indicates that odds are stacked against equity investments. Mapper Score is a proprietary trending tool that takes into account several dynamic components related to the underlying TM stocks represented within an index. It identifies certain strengths of individual stocks contained within an index and tracks how many meet minimum requirements. As a trending tool, we believe that the higher the percentage of qualifying stocks, the greater the strength of the overall index. Our scoring mechanisms do not guarantee that the markets will increase when scores are strong or decrease when the scores are weak. But we believe the long term correlation may be valuable for investing... Combining our trending features of RAM Score & Mapper Score with our Portformulas intricate Formulaic TM TM Investing Strategies results in a uniquely logical approach to investing that is exclusively available through Portformulas.

The overall RAM Score has increased (just barely) from 2332 to 2360 this month.. while the S&P 500 was slightly up for November and the Dow 30 was slightly down for November. The Mapper Score has decreased from 5 of 6 last month to 4 of 6 this month (although 1 was even). TM
Im going to divert from my normal discussions to try and provide a cut-and-dry summary of the Fiscal Cliff and related data, as so many have requested
. . .

Published just a few days ago was a very good employment report. Most folks in the know will argue that the downward revisions in the previous months were almost all due to government, not the private sectorjobs. Now the unemployment rate has fallen to another cyclical low of 7.7%... However, once again, this was primarily due to people dropping out ofthe labor force (meaning it was not due to their getting jobs). The participation rate, which represents people in the workforce versus those who are not in the workforce (i.e., students, retired, stayat-home parents, prisoners, and discouraged workers who have given up on securing a job) fell two tenths to 63.6%, but still is above its cyclical low of 63.5% reached last August.
At this point it is still not clear how hurricane Sandy influenced the data as the Bureau of Labor Statistics claims that there was not a significant impact. But that is difficult, if not impossible to believe since there certainly was an impact with Katrina... And that storm impacted a much smaller population area with a much less influential economic footprint. I would assume that future updates may provide a more accurate assessment of Sandys impact. Regardless, the recent labor report indicates that the economy continues to generate job growth that exceeds the steady state of 60,000 to 100,000 needed to stabilize the unemployment rate. Pushing all employment data aside, the real media attention is on the negotiations for the Fiscal Cliff. Most financial/economic professionals will agree that the odds-on-favorite is that there will be some sort of deal before December 31. Even if it is to simply create an extension-ofsorts and/or kick-the-can a bit further down the road. However, if such does not occur, then it would seem highly likely that a deal would occur in January under the exorbitant pressure of a free-fall over the cliff and all the ugly ramifications and disruption to the economy that it would create.

You see, the whole fiscal cliff issue is what is called a sequestration. Basically, meaning legislators agreed to and/or put it in place as a selfpolicing mechanism that they could not afford to ignore. Which is government-talk that means it is a mandatory and extensive cut in spending, including defense spending, and in this case also includes the end or sunset of the Bush tax cuts which translates into large tax increases at the same time, unless there is a deal to avoid the cliff. The idea is that the resulting ramifications are so universally damaging that both Democrats and Republicans will do whatever is necessary to avert the catastrophe and negotiate a new deal.

In the end, I pray that our government does not drop the ball and let us all down (again, as some may argue). As I stated, the odds are against them turning their back on the issue. Plus, one might surmise that President Obama will be more inclined to make a deal to keep the momentum going as the economy looks stronger, unemployment is heading in the right direction (finally), and the market has been performing favorably.

I hope this explanation helps to wrap Best of Investing, Mike Walters, CEO

the year-end Fiscal Cliff media hype. Happy Holidays!

PD RTFR M U LAS

FORMLJLA TRENoirQ

MONEY MaNAcn

Page 1 of5

Portformulas Investing Corporation Formulaic Trending Money Manczger TM SEC Registered Investment Advisor 6020 E Fulton St. Ada, MI 49301 (888) 869-5994 www.portformulas.net

PD RTFR MU LAS

FORMULAIC TRENDING MONEY MANAGER

Below you can see how the time weighted returns (TWR) of the FREEDOM SERIES models compare against their corresponding index since inception earlier this year:
(Fi.eecIoIDdomD3O _,) r-0.11% -5.57% 6.79% -0.28% -0.48% 3.87% -1.15% -0.26% 4.97% 4.41%
.

March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 Since Inception Model Difference

DJIA (Dow 30) 2.01% 0.01% -6.21% 3.99% 0.94% 0.63% 2.65% -2.54% -0.54% 0.57%

March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 Since Inception Model Difference

Freedom SP400 02_.- 0.79% -4.26% 0.80% -0.53% 3.16% 0.70% -0.94% 0.36% 0.18% -2.14% Freedom 5P500

\)

S&P 400 1.73% -0.30% -6.63% 1.73% -0.12% 3.30% 1.80% -0.87% 2.01% 2.32%

Vreedom NSDQJ

March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 Since Inception Model Difference

1.28% -2.45% 3.07% 1.56% 2.53% 1.28% -3.42% 0.29% 7.17% 5.71%

NASDAQ 4.20% -1.46% -7.19% 3.81% 0.15% 4.34% 1.61% -4.46% 1.11% 1.47%

March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 Since Inception Model Difference

1.52% -3.82% 3.16% 0.67% 0.34% 2.34% 1.20% 0.70% 6.98% 3.29%
FrR

S&P 500 3.13% -0.75% -6.27% 3.96% 1.26% 1.98% 2.42% -1.98% 0.28% 3.69%

om) March2012\j54% 1.60% April 2012 -3.82% May2012 1.76% June 2012 -1.05% July 2012 2.99% August 2012 1.89% September 2012 -1.55% October 2012 0.08% November 2012 2.28% Since Inception 0.94% Model Difference

Russell 2000 2.39% -1.62% -6.74% 4.81% -1.45% 3.20% 3.12% -2.24% 0.39% 1.34%

March 2012 April 2012 May2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 Since Inception Model Difference

1.23% -3.17% 4.90% -1.33% 2.86% 1.77% -1.39% -0.74% 6.01% 2.62%

Russell 3000 2.93% -0.77% -6.41% 3.75% 0.87% 2.25% 2.46% -1.85% 0.5 1% 3.39%

**The above returns are time-weighted returns; time-weighted returns show the compound growth rate in a portfolio while eliminating the vaiying effect created by cash inflows and outflows by assuming a single investment at the beginning of the period and measuring market value growth or loss at the end of that period. Time-weighted returns also reflect performance after advisory fees have been deducted. The Freedom series invests in equities and based on the qualification criteria, may hold equity positions regardless of overail market movement. Pastperformance is no guarantee offuture results. Investing in equities carries an inherent risk and it is possible that you could experience significant losses in the event ofa market decline. Please consider your risk tolerance carefully before investing.

p a ii T FYR U U L A S
.-.

FoRMuLAc TRTNONT MONTY MANAGER

Page 2 of 5

Portformulas Investing Corporation TM Formulaic Trending Money Manager SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 www.portformulas.net

2-

c)

,/LI

frI
0

PD RTFR M U LAS
FORMULAIC TRENDING MONEY MANAGER

RAM Score is a proprietary trending tool that takes into account several dynamic components related to the U.S. markets and economy. It features a core baseline which allows for correlation between these multiple components so that they may be added together for an overall Ram Score. As a trending tool, we believe that a positive RAM Score indicates that the odds are stacked in favor of equity investments and a negative RAM Score indicates that odds are stacked against equity investments.
RAM Score (13 mo) RAM Score (Lifetime) S&P 500

5 r

A-

fft)i41

CjL./.s,S

c;EEi\

c,

P;.

7
Moving Average (13 mo)

Jan-04

Jan-05

Jan-06

Jan-07

JWn/T

Jan-SO

Jan-li

A
-

/9y2

77kMomentum (13 mo) TRIX (13 mo)

Bull Bear (13 mo)

f?

<

IQi

..;

,; ,;

,;

,;

,;

,; ,; ,;

i_I WYa7 t p,

im 2ciLkL4

-r
Z-c21i

;2%:!6D
? 4 f#L)1

/5;

s-r/LL

cr/i/dL

4pea7w6:
Volatility (13 mo)

MACD (13 mo)

Recession Risk (13 mo)

-4
cfr
:;
;s s

ss

,,2

:;

;s

;s

;5

;s

,.;s

.;s

;s

%b
s .s .s .s

k44
,

q,

,;

,;

PU RTFYR M U LAS

FoRMuLAi TniNur1G MoNv MANAGEn

Portformulas Investing Corporation Form ulczic Trending Money Manager TM SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994
www.portformulas.net

Page 3 of 5

PD RTFR M U LAS

FORMULAIC TRENDING MONEY MANAGER TM Mapper Score is a proprietary trending tool that takes into account several dynamic components related to the underlying stocks represented within an index. It identifies certain strengths of individual stocks contained within an index and tracks how many meet minimum requirements. As a trending tool, we believe that the higher the percentage of qualifying stocks, the greater the strength of the overall index.

(NOTE: As such, we do not believe that all stocks within an index are automatically worthy of ownership. In the FREEDOM SERIES, we seek to TM only own the stocks that meet our qualification criteria. The Mapper Score illustrates how many stocks we view worthy of consideration.)

Mapper Score for Dow 30 TM Stocks Mapped = 11 Mapper Score = 36.67% 7

i;

Mapper Score for S&P 500 TM Stocks Mapped = 98 Mapper Score = 19.60%

Mapper Score for Russell 3000 TM Stocks Mapped = 221 Mapper Score = 7.37%

i4-

--;

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

Mapper Score for NASDAQ TM Stocks Mapped = 64 Mapper Score = 2.37%

Mapper Score for S&P 400 TM Stocks Mapped = 56 Mapper Score = 14.00%

Mapper Score for Russell 2000 TM Stocks Mapped = 64 Mapper Score = 3.20%

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

C).A/y

:ty-L:A-/:f41F

Our scoring mechanisms do not guarantee that the markets will increase when scores are strong or decrease when the scores are weak. TM But we believe the long term correlation may be valuable for investing... Combining our trending features of RAM Score & Mapper Score TM with our Portformulas intricate Formulaic Investing Strategies results in a uniquely logical approach to investing that is exclusively available through Portformulas.

Portformulas Investing Corporation Formulaic Trending Money Manager TM

PORTF5RMULAS.
--U

FCTPMULAu TRENDING

MONnY

MANAGFfl

Page 4 of 5

SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 www.portformulas.net

PD RTFR M U LAS.

FORMULAIC TRENDING MONEY MANAGERS

Please note that there are a number of important disclosures that must be considered before investing in Portformulas. Please read the information and disclosures contained in Portformulas hypothetical carefully before investing. Any performance figures referenced herein are hypothetical and are not indicative of future results. Purchases and sales of securities within Portformulas various strategies may be made without regard to how long you have been invested which could result in tax implications. RAM Score and Mapper Score General Disclosures The RAM Score and Mapper Score illustrations do not represent any particular Portformula strategy nor are they intended to recommend any Portformula strategy or the RAM Score feature. The information contained herein simply attempts to illustrate how our firms RAM Score feature and Mapper Score operate. The RAM Score feature can be applied to many Portformula models at no additional cost. The Mapper Score is simply an analytical informational tool. RAM Score was not developed until January 2010. Prior to January 2010, clients were utilizing RAM Scores predecessor, RAM. Clients utilizing RAM may have had different results than those reflected above. RAM Score movement prior to 201 0 is hypothetical and based on retroactive application of RAM Scores indicators to market and economic conditions existing at the time. Portformulas was not managing assets prior to 2007. It is important to understand that RAM Score is only a tool designed to assist our firms management of your account. RAM Score does not guarantee any specific results or performance and even with RAM Score on your account, it is possible that your account will lose value. RAM Score moves assets into or out of the market based on various economic and market indicators. It is possible that the market will move positively while you are not invested or negatively while you are invested, resulting in losses. Any Portformula strategy may underperform or produce negative results. Just because Portformulas maps a stock does not mean that the stock will be held in a model. Client accounts may hold less stocks than those referenced in the Mapper Score illustration. Mapper Score has no impact on performance. The RAM Score illustration utilizes the S&P 500 index because it is a well-known index and provides a recognizable frame of reference. The Mapper Score analysis uses the referenced indices because they are relevant comparisons across certain Portformula models. The indices referenced herein are not publicly available investment vehicles and cannot be purchased. Furthermore, none of the indices referenced herein have endorsed Portformulas in any way.

p 0 II T F5R nil u I. ii S

FcJPMULAIT TRTNJNc MONEY MANAcEn

Page 5 of 5

Portformulas Investing Corporation Formulaic Trending Money Manager TM SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 wwiv.portformu1as.net